The prepaid rent differs from the usual one in that all payments are made one period earlier (at the beginning of each period). The accrued annuity value is equivalent to the set of all payments at the end of the last annuity period, and the current value is at the time of the first payment, i.e., at the beginning of the first period.
Prepaid rent accounting
All types of rents, including prepaid rent, follow a principle of the regularity of payments. The following set of parameters characterizes prepaid rent:
- amount – the amount of a single payment;
- annuity period – the time interval between two consecutive payments;
- term of prepaid rent – the time from the beginning of rent till the moment of the last payment.